eDocFile

Internet Court Documents Business Plan

Financial Plan

eDocFile will require a $700,000 investment. Growth will be slow at first, but once the infrastructure is created through branding, positioning and a competent employee base, growth will be explosive. eDocFile should not need additional funding according to projections, because once sales are generated, a captive market of lawyers will generate a revenue stream that will pay for future acquisition of sales. At some juncture (we have calculated 2%, or approx. 1,780,000 transactions) critical mass will be reached and there will be explosive growth. The challenge at that point will not be sales or marketing, but HR. Growth will be limited by the number of qualified people we can hire to support our customers.

7.1 Important Assumptions

Since the company will not be financed by debt, interest rates will not be of great importance to us. Further, eDocFile will not have a significant Accounts Receivable burden as we will, in essence, have cash transactions. Services will be paid for at the time of performance. We also assume an economy without major recession, however, since our service is transaction based and in a sector of the economy that is generally recession proof this is not a major concern for us.

These factors make this venture extremely attractive, and once a self-sustaining revenue stream is achieved, the company could conceivably function as a cash machine.

General Assumptions

Year 1

Year 2

Year 3

Plan Month

1

2

3

Current Interest Rate

10.00%

10.00%

10.00%

Long-term Interest Rate

9.00%

9.00%

9.00%

Tax Rate

30.00%

30.00%

30.00%

Other

0

0

0

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7.2 Exit Strategy

One strategy, with the market's current love affair with .com companies, is to take the company public. With public money comes public scrutiny and influence, the potential eDocFile has to generate large sums of cash may raise questions about the benefits of going public. However, this is an option that can never be excluded.

The other obvious strategy is to be acquired. Unless we are not having fun doing this or have competing outside interests this would not be a first option. However, in today's climate there are some merger and acquisition deals that should not be overlooked, therefore while this is not a favored strategy it certainly deserves consideration.

We would like to build a company for the long term and think that within three to five years we could generate enough cash to buy out our investors if they need to cash out their investment, thereby keeping the company private. This kind of control will allow us to build a legal portal and give us the leverage to move beyond the legal market to other professional markets.

7.3 Break-even Analysis

The Break-even Analysis is based on the per transaction costs and fees of e-filing, as well as operating expenses.

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7.4 Projected Profit and Loss

Current projection shows that eDocFile will become profitable in the fourth quarter of its first year. However, this does not mean that eDocFile will have recovered any of its investment. While these projections are far from perfect, they do highlight financial trends; for instance, gross margins will increase as direct sales costs fall over time. The captive market of lawyers is a windfall and helps the company reach profitability sooner that most other Internet start-ups.

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7.5 Projected Cash Flow

Cash flow is healthy when compared with most start-ups, yet there is a period in the last quarter of the first year, just before profitability that cash flow becomes tight. The company's reserves are at its lowest and unforeseen catastrophes, though they may not be fatal, but could cause a serious set back. However, once we establish some semblance of market share, cash flow becomes spectacular even by the most conservative standards because this service is transaction driven.

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7.7 Business Ratios

The business ratios are impressive because of the built-in captive market. Also, the company has no debt or AR, and together with high margins the projections show high liquidity and large amounts of working capital. This is a healthy and profitable projected forecast. Our SIC industry class is currently Data base information retrieval - 7375.9901.